#FedHoldsRates Why the Federal Reserve is Holding Interest Rates—Impact of Geopolitical Tensions, Rising Inflation, and Market Stability
Geopolitical tensions, such as the Russia-Ukraine conflict and US-China trade disputes, continue to disrupt global supply chains, driving up inflation and prompting the Federal Reserve to adopt a cautious approach. The increasing strength of the US dollar as a safe-haven asset in times of uncertainty impacts the competitiveness of US exports. Additionally, disruptions in global trade push up commodity prices, further fueling inflationary pressures. Political instability and events significantly influence investor sentiment, leading to capital flows into the US, which the Fed must carefully manage to maintain overall market stability. This dynamic underscores the Fed's need to navigate complex global challenges to ensure sustained economic growth.